Earnings rise, valuations grow at NewRiver REIT

(Sharecast News) - NewRiver REIT reported higher earnings and continued valuation growth in the first half of its financial year on Tuesday, buoyed by the integration of Capital & Regional and strong performance across its retail-focused property portfolio. Underlying funds from operations rose 31% to £15.1m in the six months to 30 September, driven by the acquisition of Capital & Regional, although recent asset disposals and seasonal trends at its Snozone leisure business provided a modest offset.

IFRS profit after tax increased to £14.4m from £8.2m a year earlier.

Chief executive Allan Lockhart said the first half had delivered "another positive period" for the group, adding that the Capital & Regional deal had "enhanced the scale of our business and delivered immediate operational and financial benefits."

He said the enlarged portfolio, centred on convenience-led and value-focused retail, continued to perform well, with high occupancy, strong tenant retention and sustained leasing momentum supported by resilient consumer spending.

"The UK retail real estate market continues to evolve, and NewRiver is exceptionally well positioned to benefit from the structural trends favouring physical, convenience-led retail formats," he added.

Portfolio valuation growth helped EPRA net tangible assets per share rise to 104p from 102p in March, reflecting a 0.5% like-for-like uplift and the effect of a substantial share buyback.

NewRiver purchased 47.7 million shares in August, equivalent to 10% of its issued capital, for 75 pence apiece, enabling former major shareholder Growthpoint Properties to exit its position.

Despite divesting three shopping centres, including the Abbey Centre in Newtownabbey, the portfolio was valued at £834.7m at the period end.

Operational metrics remained robust, with occupancy at 95.3% and tenant retention improving to 96%.

The company completed 416,300 square feet of new leases and renewals at terms ahead of both estimated rental value and previous rents, while total in-store and linked online spend rose 5.4%, outpacing a Lloyds Bank benchmark.

Lockhart said the group was seeing "growing investor interest in the capital markets" and highlighted a pipeline of potential acquisitions ranging from single-asset deals to larger transactions.

NewRiver maintained a stable loan-to-value ratio of 42.3%, supported by £89.1m of cash and a reaffirmed investment-grade credit rating from Fitch.

The board declared an interim dividend of 3.1p per share, equivalent to a 94% payout of first-half UFFO per share, and expects the full-year payment to be set at 80% of annual UFFO, less the interim distribution.

Lockhart said the business had produced a total accounting return of 5.4% in the first half, describing this as "good progress in delivering our annual target of 10%."

At 0920 GMT, shares in NewRiver REIT were down 0.24% at 71.92p.

Reporting by Josh White for Sharecast.com.